FRANKFURT/LONDON/MADRID (dpa-AFX) – Encouraging business figures from the European banking sector on Thursday pushed the recently flared-up crisis at U.S. regional banks on this side of the Atlantic into the background. The sector index Stoxx 600 Europe Banks rose by 0.68 percent to 150.71 points by midday and was thus quite high in the sector tableau.
In Germany, attention was focused on Deutsche Bank. After a bumpy start, its shares recently gained two percent to 9.74 euros, making it one of the best performers in the Dax. The German benchmark index made moderate gains. Deutsche Bank started the year with a profit in the billions and thus better than expected. The financial institution posted its highest quarterly result since 2013.
Analysts expressed their confidence for the most part. Expert Chris Hallam of the U.S. investment bank Goldman Sachs, for example, emphasized that Deutsche Bank had reported unexpectedly high earnings and also surprised positively in terms of the cost-income ratio. He also praised the better-than-expected return on equity. Specialist Andreas Pläsier of analyst firm Warburg Research added that the core capital ratio was solid and had improved once again.
Meanwhile, Barclays shares recorded the most significant gains in the sector, rising 4.5 percent. This also put them at the top of the British benchmark index FTSE 100, which fell slightly.
Thanks to higher interest rates, the major bank Barclays was able to more than cushion the impact of the weaker economy. The British bank did have to significantly increase its provisions for loan losses. Revenues and profits were nevertheless slightly better than analysts had expected. The experts at Jefferies now see scope for higher market expectations.
Good news for the sector also came from the major Spanish bank BBVA: Higher interest rates continued to drive its business strongly. Despite higher costs and the so-called excess profits tax for Spanish banks, profits increased significantly year-on-year. The bank, which generates most of its profits in Mexico, thus exceeded experts’ expectations, as it has often done recently. BBVA’s shares gained almost three percent.
Analyst Sofie Peterzens at U.S. bank JPMorgan wrote that the increased common equity tier 1 ratio was the highlight of the quarterly report. However, there are likely to be some questions about consistency, as part of the performance was due to business in Turkey, she said. The country is groaning under high inflation and thus also suffering from an economic crisis overall.
Despite the good news on Thursday, the European banking index is still lagging the overall market by some distance since the beginning of the year. It is currently up just over seven percent, while the broad Stoxx Europe 600 index has gained more than nine percent in the same period.
The bank quakes in the USA and Switzerland in March proved to be a sharp blow for the European banking industry. This was triggered by the liquidation of Silvergate Capital, a U.S. financial group focused on the crypto industry. A few days later, U.S. money house Silicon Valley Bank (SVB), which specializes in startup financing, was placed under the control of the U.S. deposit insurance company FDIC and closed. Other small banks stumbled, most recently First Republic Bank.
In Europe, Credit Suisse slid into crisis after numerous scandals, criticism for poor risk management and money outflows in the triple-digit billions. To prevent a conflagration and global financial crisis in the face of nervousness in the banking industry, the government and regulators urged rival UBS to take over.
The disclosure of Silicon Valley Bank’s initial problems had triggered a price slide on the overall European market on March 10. But while the Stoxx Europe 600 has since recovered its losses, the banking index is still in the red. The current discount is nine percent./la/zb/mis
